The annual index – which analyses 27 developed countries for their impact on the world's poor across seven policy areas – found Australia would struggle to improve on its middle-of-the-pack ranking of 14th without boosting foreign aid and efforts to address environmental issues, especially climate change.

Australia's high per capita emissions reduction are hold it back, according to a new global development index.Credit:Paul Jones

"Environment is one of Australia’s weaker policy fields on the CDI. Its low rank is largely due to its poor performance curbing climate change," the 2018 report states, noting relatively low petrol taxes, high fossil fuel production and high per capita emissions.

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Ian Mitchell, a senior policy fellow with the Washington DC-based think tank, said: "Australia's emissions are a bit lower than they were and they compare quite well others in terms of the percentage reduction over 10 years but they are still at quite a high level."

On environmental indicators, Australia was ranked 25th, only ahead of South Korea and Japan. The United States is 24th.

The poor environment result comes as the Coalition government continues to wrestle with its climate and energy policy. Prime Minister Scott Morrison says the priority is bringing down power prices and securing reliable energy, insisting Australia will be able meet its commitments to the Paris agreement and reduce emissions by 26 per cent by 2030. Currently, Australia is not on track to meet that target.

The policy inertia has caused significant tension with Pacific nations, who have pressured Australia to do more on climate change, which poses particular threats to low-lying island nations in the region.

In addition to the environment, the development index considers policy across aid, finance, technology, trade, security and migration.

Mr Mitchell said Australia's foreign aid was well-targeted but the level of spending paled in comparison to that of other developed countries.

"The countries at the top of the index, they are giving 1 per cent of their gross national income on aid regularly," he said.

"If Australia wants to become a development leader, it needs to increase the quantity of aid, and tackle environmental issues and focus on reducing greenhouse gas emissions.”

The Abbott and Turnbull governments cut Australia's aid budget to about $4 billion, representing about 0.22 per cent of gross national income. This compares to a previously bipartisan commitment to 0.5 per cent, the 0.7 spent by Britain, and the OECD average of 0.31 per cent.

Mr Mitchell said Australia could improve its transparency around aid, arms exports and finance but pointed to trade as an area of strength. Australia was ranked third in trade policy based on a commitment to open trading relationships with developed and developing countries.

"That's really important in development and Australia certainly deserves credit for that. An international leader in the trade sphere," he said.

The top 12 places in the index were European nations, with Sweden in first place. New Zealand was 13th while the United States came in at 23rd.